According to the preliminary GDP report for July-September 2025 released by Japan’s Cabinet Office, the real seasonally adjusted GDP decreased by 0.4% from the previous quarter, representing an annualized decline of 1.8% after accounting for price changes. This marks the first negative growth in six quarters.
The median private forecast compiled by Nikkei Quick had projected an annualized decline of 2.4%. Personal consumption, which accounts for over half of GDP, increased by 0.1% from the previous quarter, while equipment investment grew by 1.0%.
The actual GDP size for July-September was 561.7 trillion yen on an annualized basis.
Exports decreased by 1.2%, turning negative for the first time in two quarters. Automobile exports declined due to the impact of US tariff policies, dragging down overall performance.
Imports fell by 0.1%, marking the first negative growth in three quarters. Crude oil, natural gas, and air passenger-related items contributed to the negative performance.
Private residential investment dropped by 9.4%, showing negative growth for the first time in three quarters. Following the tightening of Japan’s housing energy efficiency standards from April, there was a significant reactionary decline after the last-minute demand surge in March. Since GDP accounts for construction progress, the July-September period reflected this negative impact.
Although personal consumption grew by 0.1%, the growth rate slowed, but it maintained positive growth for the sixth consecutive quarter. Due to this year’s intense summer heat, beverage sales including alcoholic drinks increased overall, and food services such as dining out also showed growth. On the other hand, autumn clothing sales remained sluggish, and automobile consumption showed significant weakness.
Equipment investment increased by 1.0%, marking the fourth consecutive quarter of growth. Software investment continued to expand, driven by labor-saving investments prompted by labor shortages.
